Deck 9: Intervening in the Market System

Question 1

If a minimum price is set above equilibrium (assuming a downward sloping demand curve and upward sloping supply curve) there will be:

A) A price fall
B) Excess supply
C) Excess demand
D) A price increase

Answer 1

B

Question 2

A negative production externality can occur when:

A) The Social Marginal Benefit is greater than the Social Marginal Cost
B) The Social Marginal Cost is greater than the Private Marginal Cost
C) The Private Marginal Benefit is less than the Social Marginal Benefit
D) The Social Marginal Cost is greater than the Private Marginal Benefit

Answer 2

B

Question 3

In a buffer stock scheme:

A) The government buys up products when there is excess demand.
B) The government sells products when there is excess supply.
C) The government buys products when there is a shortage.
D) The government sells products when there is a shortage.

Answer 3

D

Question 4

In a buffer stock scheme:

A) The government uses the price to regulate demand.
B) The government stores products to sell when demand is low.
C) The government stores products to sell when supply is low.
D) The government buys products when there is a shortage to sell abroad.

Question 5

The government may regulate monopolies because this form of market structure:

A) Increases consumer surplus.
B) Increases community surplus.
C) Increases producer surplus.
D) Increases allocative efficiency.

Question 6

Privatization:

A) Increases the size of the public sector.
B) Decreases the size of the private sector.
C) Increases the provision of goods and services by the government.
D) Occurs when ownership of organizations is transferred from the public to the private sector.

Question 7

Privatization does NOT involve:

A) Increasing share ownership in the private sector.
B) Reducing the size of the private sector.
C) Raising revenue for the government.
D) Replacing social objectives with profit maximization as an objective for the organization.

Question 8

The public sector is more likely to undertake a project for social reasons even if it is not more profitable than the private sector:

Question 9

A government is likely to want to control a natural monopoly.

Question 10

The overall welfare of society is measured by _________ surplus.

Question 11

Direct provision of goods and services is undertaken by the government for:

A) All goods and services
B) Particular goods and services such as education
C) Expensive goods and services
D) Imported goods and services

Question 12

Which of the following is not a form of anti-competitive behaviour?

A) Forming a cartel
B) Predatory pricing
C) Firms controlling supply chains
D) None of the above

Question 13

The CMA stands for:

A) Competition and Markets Authority
B) Competition and Monopolies Agency
C) Coordination of Monopolies Authority
D) Complaints of Market Aggression

Question 14

The Competition Commission investigates mergers or takeovers where the combined market share is:

A) Exactly 25 percent
B) In excess of 25 percent
C) In excess of 50 percent
D) Exactly 50 percent

Question 15

Which of the following is not a possible problem associated with anti-competitive behaviour?

A) Higher prices
B) Fall in producer surplus
C) Less investment in R & D
D) Poor customer service